FDIC Law, Regulations, Related Acts

4000 - Advisory Opinions

Temporary Employee Working for Insured Depository Institution is
Subject to Section 19 of the FDI Act

FDIC--93--20

March 17, 1993

Nancy L. Alper, Counsel

In our conversation of March 16, 1993, you raised a question
concerning whether temporary employees were covered by section 19 of
the Federal Deposit Insurance Act ("Act"), 12 U.S.C. 1829,
("section 19"). You stated that *** (the "Bank") has a
policy of hiring temporary employees and that the term of work of a
temporary employee for the Bank may last from one to two weeks up to
months at one time.

As you correctly stated, section 19 has been significantly expanded
by the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 ("FIRREA") and the Comprehensive Thrift and Bank Fraud
Prosecution and Taxpayer Recovery Act of 1990 ("Crime Bill"). As
amended, section 19 now prohibits, absent FDIC consent, a
"person" convicted of a criminal offense involving dishonesty or
breach of trust, or who has agreed
to enter into a pretrial diversion or
similar program in connection with a prosecution for such offense,
from: (a) owning or controlling directly or indirectly an insured
depository institution; (b) becoming or continuing as an
institution-affiliated party; or (c) participating, directly or
indirectly, in any manner in the conduct of the affairs of an insured
depository institution.

As I stated to you in our conversation, the staff of the Legal
Division has proposed a policy statement interpreting section 19. That
proposed policy statement contains the following definition of
"employee" as "any person who receives payment for his or her
services from the insured depository institution and where the
institution has the power or right to control or direct the material
details of how the work is to be performed, and includes but is not
limited to part-time, casual, temporary, intern or other
individuals." It is the view of the undersigned that a temporary
employee who is working for an insured depository institution for a
period of time is an obvious example of a person who would be
considered participating in the conduct of the affairs of an insured
depository institution and, thus, come within the parameters of section
19.

However, as we discussed yesterday, the proposed policy statement
and the conclusions contained herein are merely opinions of the staff
of the Legal Division and do not represent any findings or
determinations by the Board of Directors of the FDIC.

Should you wish to discuss further the present issue or if you have
other issues concerning section 19, please do not hesitate to contact
me at (202) 898-3720.